Business
Wednesday’s analyst calls: DraftKings bull case, credit card play for the long haul
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(This is CNBC Pro’s live coverage of Wednesday’s analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) Wednesday’s batch of analyst research included bullish calls on a credit card giant and a sports betting name. Barclays initiated American Express with an overweight rating, citing the company’s appeal to millennial and Gen Z consumers. Morgan Stanley also reiterated DraftKings as overweight , noting its bull case was within reach. Check out the latest calls and chatter below. 6:50 a.m. ET: Cantor Fitzgerald downgrades Bristol-Myers Squibb Cantor Fitzgerald thinks its time to move to the sidelines on Bristol-Myers Squibb . The firm downgraded the pharmaceutical stock to neutral from overweight and lowered its price target to $55 per share from $68. Cantor’s forecast implies roughly 9% upside from Tuesday’s $50.52 close. “We’ve been hoping things would turn around for a while now, but the new launch thesis just hasn’t materialized – and there’s no line of sight to restoring investor confidence in the new product launches/pipeline,” analyst Olivia Brayer said. The analyst added that the slate of product launches could improve and underpin upside for the stock, but that is more likely to materialize over the long-term. Bristol-Myers Squibb has slipped nearly 30% year to date. — Brian Evans 6:48 a.m. ET: Bank of America upgrades Generac to neutral, says stock looks ‘increasingly de-risked’ Bank of America feels comfortable letting up on some if its cautiousness toward Generac . The bank upgraded shares of the backup power company to neutral from underperform in a Wednesday note and increased its price target to $110 per share from $76. BofA’s forecast implies about 0.3% upside from Tuesday’s $109.62 close. “Unlike our resi components coverage, which is experiencing contracting end customer demand against elevated channel inventories, GNRC is farther along in its channel destock cycle,” analyst Julien Dumoulin-Smith said. “With greater visibility into its channel, we argue GNRC is relatively better positioned than many product businesses in our coverage. After a refreshed look at the business, we see fewer lingering risks into 2024 than previously understood.” Generac shares have lagged this year, rising just 9% in that time. GNRC YTD mountain GNRC in 2023 — Brian Evans 6:13 a.m. ET: Wells Fargo initiates Warner Music Group stock at equal weight, says more clarity is needed Wells Fargo said Warner Music Group investors need more clarity on the company’s tech investments. The firm initiated coverage of the record label conglomerate stock with an equal weight rating and a $35 per share price target, or roughly 6% above Tuesday’s close. Shares have slipped more than 5% in 2023. “We think the new leadership will focus on tech investments to drive efficiency/effectiveness to reverse recent share losses, which could limit NT margin expansion but could also accel LT growth,” analyst Omar Mejias said. “It’s very much a tech way of approaching the business (vs. say more A & R), adding risk and reward. Given the newness of the team we prefer to take a wait-and-see approach, but could quickly become supporters of the initiatives if they look to be proving out.” — Brian Evans 5:50 a.m. ET: JPMorgan downgrades Canadian Solar, says near-term looks ‘less favorable’ JPMorgan said the short-term outlook for solar module stock Canadian Solar will be choppy, and it’s unclear when shares will start growing again. The bank downgraded the Canadian Solar to underweight from neutral in a Wednesday note and lowered its price target to $22 per share from $32. JPMorgan’s forecast implies roughly 2% upside from Tuesday’s $21.59 close. Shares have slipped more than 30% this year. “While the solar industry clears channel inventory over the coming quarters in certain markets (Europe, US), we expect other areas of the value chain which have relatively more pricing power (e.g. trackers, inverters) to recover sooner than modules, leading us to a relatively less favorable view towards CSIQ near-term,” analyst Mark Strouse said. The analyst added that higher interest rates could remain a headwind to channel inventory as well as steeper competition. “Over time, we expect CSIQ to continue to gain market share, but we believe risk-reward is unfavorable until near-term visibility improves,” he said. — Brian Evans 5:45 a.m. ET: Morgan Stanley reiterates DraftKings as overweight, says bull case possible Morgan Stanley analyst Stephen Grambling reaffirmed his overweight rating on DraftKings a day after the sports betting company held an investor day in which it issued bullish long-term targets. “DKNG’s Investor Day outlined EBITDA targets above consensus, with details affirming our more positive view,” Grambling wrote. “Importantly, the outlook was built off of several assumptions that could prove conservative or provide flexibility to reinvest: structural hold, market share, and promos.” The analyst noted that the guidance given confirms his bull case for the stock, which consists of a $70 price target. That forecast implies upside of 89%. DraftKings shares have been on fire this year, surging 225%. DKNG YTD mountain DKNG in 2023 — Fred Imbert 5:45 a.m. ET: Barclays initiates American Express as buy, lauds long-term growth outlook American Express will find long-term success as the company appeals to millennials and Gen Z, according to Barclays. The bank initiated coverage of the credit card giant with an overweight rating and a $184 per share price target — which implies more than 17% upside from Tuesday’s close. “We view AXP as the best card issuer and we are positive on the longer-term growth prospects around the company’s penetration of the Millennial and Gen Z cohorts,” analyst Terry Ma said. “Bears will argue that revenue growth has been decelerating and NII is becoming a bigger contributor to AXP’s algorithm. But revenue growth has stabilized over the last two quarters and credit performance remains below pre-pandemic levels.” American Express shares have lagged the broader market this year, rising just 6.2% versus the S & P 500’s 17% jump. AXP YTD mountain AXP in 2023 — Brian Evans
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